Getting into college is exciting! But sometimes, college education costs a lot—fees, books, hostel, travel, and more. If your family can’t afford everything at once, student loans can help. A student loan is money you borrow from a bank or financial company to pay for your education. You can repay it later, in small amounts (EMIs), once you finish college and get a job.
In this blog, we’ll explain all the important things you need to know about student loan options for undergraduates in a very simple way.
Also Read: Education Loan Against FD Interest Rate – A Simple Guide
💡 Types of Student Loans in India
| Loan Type | Who Provides It | Key Feature |
| Education Loan by Banks | SBI, HDFC, ICICI, etc. | Best for regular UG students in India or abroad |
| Loan Against Property (LAP) | Bajaj Finserv, Tata Capital, etc. | Big loan amount by keeping property as security |
| Private Lenders | NBFCs like Avanse, InCred | Fast processing, less paperwork |
| Government Schemes | Vidya Lakshmi Portal, CSIS | Lower interest for eligible students |
✅ Who Can Apply for a Student Loan?
To get a student loan, you must:
- Be an Indian citizen
- Have completed Class 12 (for UG)
- Have proof of college admission
- Choose a recognized course (like B.Sc., B.A., B.Tech, etc.)
- Have a co-applicant (like parents or guardian)
📜 Documents Required
- Admission letter from college
- 10th & 12th marksheets
- ID proof (Aadhaar, PAN)
- Address proof
- Bank statements (6 months)
- Income proof of co-applicant
- Passport (if studying abroad)
💰 How Much Loan Can You Get?
| Loan Type | Amount Range | Collateral |
| Without Collateral | Up to ₹4 lakh | No |
| With Collateral (Property, FD, etc.) | ₹4 lakh to ₹50 lakh+ | Yes |
| Loan Against Property | Up to ₹10.50 crore (Bajaj Finserv) | Yes |
🔍 Tip: For Indian colleges, students usually borrow ₹1 to ₹10 lakh. For foreign universities, the amount may be ₹20 lakh or more.
📈 What About Interest Rates?
| Bank / NBFC | Interest Rate (approx) |
| SBI | 8.25% to 10.65% p.a. |
| PNB | 8.5% to 10.9% p.a. |
| HDFC | 9.5% to 13% p.a. |
| ICICI | 9.5% to 11% p.a. |
| Bajaj Finserv (LAP) | 9% to 12% p.a. |
🔢 Simple Interest & EMI Example: Student Loan Options for Undergraduates
🎓 Example
- Loan amount = ₹5,00,000
- Interest rate = 10%
- Loan term = 5 years (60 months)
EMI Formula
Where:
- P = Principal (Loan amount)
- R = Monthly interest (10% ÷ 12 = 0.0083)
- N = Number of months (5×12 = 60)
👉 EMI ≈ ₹10,624 per month
👉 Total repayment = ₹10,624 × 60 = ₹6,37,440
👉 Interest paid = ₹1,37,440
✅ Use an online EMI calculator to check different loan amounts.
🕒 What Is the Moratorium Period?
A moratorium period is a break time where you don’t need to repay your loan immediately.
- Usually: Course duration + 6 to 12 months
- You can start EMIs later, after completing the degree
🏛️ Government Schemes for Student Loans
1. Vidya Lakshmi Portal
- One-stop platform to apply to multiple banks
- Compare loan offers and apply online
- Website: www.vidyalakshmi.co.in
2. Central Sector Interest Subsidy (CSIS)
- No interest during the moratorium period
- For students with family income < ₹4.5 lakh/year
💡 Tips to Choose the Right Student Loan
✅ Choose lower interest rate banks
✅ Check processing charges
✅ Ask about prepayment or penalty fees
✅ Use EMI calculator before applying
✅ Choose government schemes if eligible
✅ Borrow only what you need—don’t over-borrow!
🧾 Loan Repayment – Easy to Understand
- Starts after moratorium
- Monthly EMI depends on amount & interest
- Repayment period is usually 5 to 15 years
- You can repay early without penalty (in many banks)
📍 Top Banks Offering UG Student Loans
| Bank | Max Loan | Interest (approx) | Features |
| SBI | ₹20 lakh (India), ₹30 lakh (abroad) | 8.25%–10.65% | Subsidy for low-income students |
| HDFC | ₹20–₹30 lakh | 9.5%–13% | Fast approval, no margin for top colleges |
| ICICI | ₹20 lakh+ | 9.5%–11% | No co-applicant for select colleges |
| Bajaj Finserv (LAP) | ₹10.50 crore | 9%–12% | Property required as security |
📝 Conclusion
Student loans help you follow your dreams when money is a problem. You can study now and pay later in small parts. Many banks and finance companies offer loans with flexible options. Just compare interest rates, understand repayment terms, and borrow only what is needed. Also, don’t forget to check for government support!
Education is an investment in your future—and student loans are the bridge to help you reach your goals.